Prolonged lockdowns to pressure China for remainder of 2022: Fitch

By Ovunc Kutlu

ANKARA (AA) - Prolonged coronavirus pandemic-related lockdowns in China and their economic effects are expected to pressure China for the remainder of this year, Fitch Ratings said in a statement on Friday.

The two assets that will feel the most pressure in China are residential mortgage-backed securities and asset-backed securities, which were largely stable during the first quarter of the year, the global rating agency said.

"Lenders are providing hardship relief to affected customers, such as payment holidays and loan restructuring," the statement noted.

"However, these short-term and temporary measures may be insufficient if lockdowns are drawn out," it added.

Fitch announced on May 3 that it has lowered its forecast for Chinese economic growth for this year to 4.3%, from 4.8%, citing "spillover to economic activity from COVID-19 pandemic-related disruption becoming apparent in March."